Retail Property Market Update: Greater Boston Mid Q4 2019

So, how’s the Greater Boston retail market?

I get that question quite a bit and it’s a great question. If you read the news, all you’re hearing about are big-box stores, department stores, and the Amazon effect.

But, what’s interesting about retail, particularly in the market that we track, which is the 1 to $20 million market for Rockingham, Essex and Middlesex counties, is that this market isn’t necessarily following what you’re seeing in the news.

In fact, what we’re seeing is continued appreciation. In fact, the average price per square foot for retail property, between $1M and $20M, is currently trading at $221 a square foot.

It’s continued to appreciate, as have rents, from quarter 4 2010 to quarter 4 2019. The average rents for retail space are $23.20 a square foot. That’s up 15.39% over the last nine years.

Retail property investments shows signs of ongoing appreciation

So, we’re continuing to see appreciation in retail and we’re continuing to see investors have appetite for retail, but what we are seeing is velocity slowing down a little bit.

So, what I mean by that is that while prices are appreciating, the number of buildings that are trading by year are slowing a bit. In 2018, there were 59 more trades than there should be by the end of 2019.

That’s based on the annualized information that we project, following the activity in the market.

The vacancy rates are at 2.8%. Very low.

This is 137 million square foot market. There’s a lot of retail in the market. We are seeing a downtick in availability. So, what that means is that landlords aren’t anticipating space coming back. But we are seeing some rental depreciation, so rents are are turning a little bit.

Greater Boston retail market cycle monitor nears peak

The Glenn Mueller market cycle chart shows us at peak for retail in our greater Boston MSA, as you can see here. So, definitely seeing signs of continued health and exuberance in the market. How long it’ll go for, I don’t know, but we are seeing a slight cooling in volume. If you like getting these market updates, please subscribe to our channel.

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Links to greater Boston real estate market trends:

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